Wipro Ltd (WIT) 2015 Q3 法說會逐字稿

Ladies and gentlemen, good day and welcome to the Wipro Limited Earnings Conference Call.

As a reminder, all participant lines will be in the listen-only mode.

(Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Aravind Viswanathan.

Thank you, and over to you sir.

Thank you, Inba.

Good evening and good morning to all of you, wish you all a very Happy New Year.

A warm welcome to our quarterly earnings call.

We will begin the call with business highlights and overview by T. K. Kurien, Executive Director and CEO, followed by the financial overview by our Executive Director and CFO, Suresh Senapaty.

Post that, the operator will open the bridge for question and answers with our management team.

The senior management team of Wipro is present here to answer your questions.

Before Mr. Kurien starts, let me draw your attention to the fact that during this call we may make certain forward-looking statements within the meaning of Private Securities Litigation Reform Act 1995.

These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected.

The uncertainties and risk factors are being explained in the detailed filings with the SEC.

Wipro doesn't undertake any obligations to update forward-looking statements to reflect events and circumstances after the date of filing thereof.

The conference call will be archived and the transcript will be available on our website www.wipro.com.

Ladies and gentlemen, let me now hand it over to Mr. Kurien.

Good evening and good morning to everyone across the world.

Thank you very much for joining this meeting.

For us, this quarter has been a quarter of execution, the results of which are reflected in our performance.

Our IT Services revenue grew sequentially by 3.7% in constant currency, towards the upper end of our guidance.

Overall, the demand environment continues to hold steady, with opportunities across key markets in North America and Europe.

We see recovery in demand in retail and manufacturing sectors; the banking and financial services continues to demonstrate strong demand, especially in the US and in Europe.

One area of caution (technical difficulty) to impact CapEx and discretionary spend in the near term.

Now, let me give you a sense of our quarterly performance.

Healthcare, life sciences and services business unit continued to grow strongly with a 7.5% sequential growth and a 20.3% year-on-year constant currency growth.

After many quarters, our retail, consumer goods, transportation and government business has grown sequentially by 5% on a constant currency basis.

The momentum in infrastructure services continues with strong deal wins and with a growth of 20.5% year-on-year.

Our BPO business on a constant currency basis grew 4.6% sequentially.

Our efforts in revamping our delivery structure for efficiency and value creation continued to yield results.

Customer satisfaction scores have improved by 4% year-on-year.

From a strategy perspective, nothing really has changed in the way we're going after market.

We remain focused on building our digital story to drive business transformation and also further leveraging Open Source, data and AI to drive innovation and cost rationalization.

On the digital front, our ability to pull together a range of competencies across content, analytics, AI and agile development for execution has been recognized by both customers and industry analysts.

Wipro has won 10 deals in the digital space around driving transformation and supporting our customers in their digital journey, all the way from conceptualization, right through to implementation.

On the Open Source and AI space, we're building scale through industry specific reference architecture, migration tool kits and more importantly, by building a strong partner ecosystem.

We scaled our operations and trained over 1,000 resources in these areas.

This practice has scored 12 significant wins and built a robust pipeline during the quarter.

We continue to focus on building intellectual property in a way by which we can differentiate ourselves.

We've filed 143 patent applications over the last nine months.

In a dynamic business environment, people remain our primary assets.

Our quarterly attrition rate has dropped from 16.9% to 16.4%.

We continue to deepen employee engagement and make significant investments in training and skill development.

Last quarter, we trained over 6,000 employees in new delivery methods and techniques.

We're gratified that our teams are responding positively with employee engagement scores improving over the previous year.

Lastly, before I close, I'd like to recognize Senapaty for his contribution over the years.

Senapaty joined the Company when the topline of the Company was roughly INR40 crores or INR400 million.

From thereon till today, he's been part of the journey where Wipro has evolved from being a domestic company to being a global leader that's today.

This will be the last time he'll be with us for discussing quarterly results.

On behalf of Wipro, I would like to thank him for his contribution.

Now, Senapaty will take over from me.

Thank you.

Thanks T. K. Good day ladies and gentlemen, and good evening to those of you who are in India.

Let me begin by wishing you a very, very Happy New Year.

So like Kurien said, this will be my last earnings call as CFO of Wipro Limited.

After over 35 years in the Company and 20 years as CFO, under the Chairmanship of Mr. Premji, I'll retire from the Company on March 31.

It has been an unbelievably exciting journey and I'm thankful for all your support over the years.

Wipro has provided me an outstanding platform for learning and growth and I'll be forever grateful to the Company and my colleagues for this wonderful journey.

I also would like to congratulate Jatin on taking over as the CFO of Wipro Limited.

Over the past [15 years], Jatin has handled diverse roles in Wipro and left an indelible mark on all of them.

He stood out as a natural successor.

And I'm sure you will extend the same support, if not better, to this bright leader.

As I prepare to step down by the end of this quarter, I feel very confident that Wipro is well placed to take off in its growth path under new dynamic leadership of Kurien, Saurabh, Jatin and the entire team.

So, in regard the financial performance for the quarter, kindly note that for the convenience of readers, our IFRS financial statements have been translated into dollars at the noon buying rates in New York City on December 31, 2014 for cable transfers in Indian rupee, as certified by the Federal Reserve Board of New York, which was $1 equal to INR63.04.

Accordingly, revenue of our IT services segment that was $1,795.4 million, or in rupee terms $113.4 billion appears in our earnings release as $1,800 million based on the convenience translation.

Total revenues for the quarter were INR119.9 billion, an increase of 6% year-on-year.

Total net income for the quarter was INR21.9 billion, an increase of 9% year-on-year.

In IT services, our revenue in US dollar terms for the quarter was $1,795.4 million, sequential growth of 1.3% on a reported basis.

This was impacted by depreciation of major currencies against the US dollar.

In constant currency, IT services revenue grew 3.7%, our highest growth in last [two or three] quarters.

IT services margin declined marginally on a quarter-on-quarter basis.

In the current quarter, utilization dropped and negative cost currency has been offset by fixed price productivity and [ACN] optimization.

Our IT products segment delivered revenue of INR7.7 billion, which is about $123 million for the quarter ended December 31.

On the currency front, our realized rate for the quarter three was INR63.19 versus a rate of INR61.66 realized for the quarter two of this year.

As of period end, we had about $2.2 billion of ForEx derivatives contracts as hedges.

The effective tax rate for the quarter was 22% as against 22.8% in Q2, driven by completion of certain assessments.

For the quarter, we generated operating cash flow of INR17.2 billion, which was 79% of net income.

We generated free cash flow of INR16.1 billion, which was 73% of net income.

We'd be happy to take questions from here.

(Operator Instructions) Anantha Narayan, Credit Suisse.

T.K., I had a couple of questions.

The first was related to the energy vertical.

Is it something that you're significantly worried about in FY16 or are there sort of other things that could offset some of the pressures that your customers are facing because of oil prices and how much of this has weighed in the 4Q guidance?

So that was the first question.

And the second was, if you could just give us a bit more color on Europe for you, because while this quarter has been good, it's been fairly choppy in the past few quarters.

So, any color would be helpful.

So, on the oil and gas sector itself, Anantha, our view is that in short-term we'll have pain, we have factored some of that pain into our quarter four guidance.

Long term, in that market, as oil prices continue to remain where they are, we see substantial opportunities cropping up across the world in terms of outsourcing.

So while in the medium term to long term, we expect that to be positive, in the short term, we would take some pain in that particular business.

But overall, if you look at our other verticals, generally, all the other verticals that we have, including our geographies have been kind of firing.

And we don't expect that trend to kind of slow down, at least in quarter four and into the next year, we see demand as being fairly robust and to that extent, the opportunities that we have on the table are, in a way, we believe, might offset some of the negatives that we may carry in terms of energy.

If you could just comment on the choppiness in the European geography for you.

Europe is kind of interesting for us, because if you look at a large part of the oil and gas business that we had, a large part of it is all weighted towards Europe and that has really resulted in the geographical distribution, the choppiness that you've seen there over the past couple of quarters.

We made that up to some extent by diversifying our portfolio outside of Europe, but that has not paid the kind of dividends that we expected at least in the short run, given the fact that oil prices went down from where they were two quarters ago.

So overall, if you ask me, I expect Europe, medium term to be positive, it will continue to grow for us.

The key for us really would be in terms of where the currency finally ends up as far as euro-dollar is concerned.

So, while volume would continue to grow, and if you look at our last quarter numbers on a constant currency base has grown by 5% and that itself is a decent growth.

So overall, we don't see growth actually slowing down too much.

We may see temporary choppiness caused by some accounts in some industries, but not beyond that, secular trend is strong.

Thanks, TK, and If I could just take this opportunity to just congratulate Jatin and wish Mr. Senapaty all the best for his future plans.

So we'll miss you, Mr. Senapaty on these calls, but thank you for everything and wish you all the best.

Thank you Anantha.

Joseph Foresi, Janney Montgomery Scott.

My first question is just around sort of digital and some of the newer offerings and what the opportunity is there.

Can you help frame for us your exposure to some of the newer technologies, what kind of impact it's potentially having now and further in the numbers and how you look at the opportunity there?

On the digital opportunity, Joe, right now most of the work that we're basically doing is really (inaudible) and figuring out -- belong with the customers and how we can completely kind of digitize the processes, using analytics, mobility, more specifically location and how we can fundamentally look at the underlying architecture to make sure that straight-through processing is actually enabled.

That's the real focus of what we're doing.

So we're doing a whole bunch of projects with customize primarily around visioning.

That's really where the big activity is happening right now.

As we go through industries, we believe what will happen is that we'll be able to create framework and intellectual property around this, which we can replicate then across the industry segments that we operate in.

I think that's the objective.

Digital by itself is terrific for us in terms of opportunity and that really is the future.

Today it's not significant enough for us to kind of move the meter as far as our quarterly growth is concerned.

Does the emergence of new catalysts like digital, infrastructure, some of the work you're doing in Europe, does that just offset some of that commoditization in application development and maintenance or do you believe that that's going to be accretive to growth rates over the short and long-term?

I think it's going to be accretive over the short and long term, but digital, I would say, medium term, it won't be immediate.

Clearly, we've seen far more interest in other technology components like, for example, using Open Source in development.

Those are becoming bigger and bigger areas.

But if you look at digital itself, is that going to be a billion-dollar opportunity for me over the next couple of quarters?

The answer is no.

And then the last one from me, and also my congratulations to Senapaty from kind of moving on to maybe [retirement].

I know it's been a long time that we've known each other, but how do you expect -- what are your expectations from the margin profile with commoditization and these new technologies over the long-term?

Do you expect margins to hold?

Are these going to be dilutive in the short and then eventually become accretive?

I am just again trying to frame sort of the argument over the long-term?

Thanks.

Well, Joe, it's like this, it will remain in a narrow band.

No grade ups, no grade downs.

But, clearly from our perspective, as commoditization happens, we would drive efficiency in the back.

Absolutely no question about it.

Keith Bachman, Bank of Montreal.

I had a couple as well.

First, could you talk a little bit about how you're characterizing, what you're seeing in financial solutions?

Your sequential growth was significantly less than the overall Company weighted average.

What are you seeing there and what do you expect in the next couple of quarters?

Let me hand that call over Keith to Shaji Farooq who runs the Banking and Financial Services Business globally.

Yes, what we are seeing in financial services is very much a reflection of what is occurring across the globe in the financial services area.

It's a fairly mature market and lot of pressures, cost pressures, revenues for the clients aren't growing.

So to sustain earnings, the focus on cost is huge.

So while in fact, we're seeing pretty strong volume growth and we are also seeing successes in large deals, we expect to see continued pressure in certain areas when it comes to cost, particularly when it comes to commoditized services.

That will have somewhat of a limitation on how much growth you should expect quarter-over-quarter and the numbers you see this quarter, a constant currency growth of 2.2%, and the reported growth of 0.2%, they are really in line with what we had expected getting into the last quarter.

If you look at financial services over the next 12 months, would you expect it to grow in line with the Company weighted average or below?

I would say, we will grow in line with the Company weighted average.

Of course, there are a lot of extraneous factors that are playing out right now and there could be differential impact in the financial services areas, as T.K. mentioned, in other areas as well.

But we have to wait and see how that goes.

Notwithstanding those, we should expect our growth to be in line with the Company growth.

And let's go to my second question, is ADM was a weak sequential growth, how would you characterize the state of that business?

Keith, this is Jatin Dalal.

See, fundamentally, we have spoken about that a couple of accounts, where we have completed the large projects and the replenishment of that workings will take a couple of quarters to come through and the lower growth in ADM that you're witnessing is an outcome of that.

And we do hope that we will be able to reignite the ADM growth as we go forward.

Also, if you see, we are quite unique for ourselves that we declare -- we branch out business application services separately and you should see the both lines together if you are really comparing apple to apple with the industry trends and we continue to grow in a healthy manner in business application services.

This quarter, the growth is 9% YoY, which is in line with the Company growth rate.

The last one from me then is the operating margin was down a little bit sequentially, call it 20 basis points.

With currencies, I thought it actually might be a little bit better.

What were some of the puts and takes that kept you from capturing more margin opportunities?

I assume some of the wage rates were in there, but if you could just describe some of the impacts to margins this quarter and how that will play out next quarter and that's it for me?

Thank you.

So, Keith, this was a quarter in which operationally there were some pluses and some minuses, but if you really see the margins have been in a very narrow range of that we declared in quarter two, which was 22%.

The delta is 20 basis point which in some form is the currency impact, because while we've had an upside on rupee-dollar leg, there was clearly downside on the cross currencies and which flew through as the overall slightly negative currency impact for the quarter.

Operationally, we have remained flattish vis-a-vis quarter two.

Sandeep Muthangi, IIFL.

I have two questions, the first one is on the infrastructure services.

TK, could you give us some color on how the cloud exercise impacting infrastructure services and what kind of outlook do you have for the near and the long-term?

The best person to kind of explain this would be G. K. Prasanna who runs our infrastructure business.

I heard the question as impact of cloud on infrastructure services.

Is that right?

Yes, that is correct.

Firstly, it is an opportunity, because there is a lot of work that has to be done in terms of building the cloud infrastructure right now.

So there's a lot of work that is coming in terms of doing -- building out that infrastructure, then also there is a lot of work in terms of moving these workloads to cloud.

And so, in the short-term it is an opportunity.

And then we see our share of this work coming to us and we see it as positive.

Medium term, right now we all know, right, that because workloads will move out of conventional infrastructure into cloud, there will be an impact right in terms of some of the conventional work coming down.

That's how I see this.

And by medium-term, are we speaking of -- are we not speaking of the next three, four years and the real (technical difficulty)?

Cloud is real.

So, let me leave it at that.

It is no longer a concept, it is real, people are doing this work fairly seriously.

So a lot of work will move to cloud, apart from just office productivity applications, lot of enterprise applications are moving and will move.

So cloud is serious and cloud is real.

My second question is on the client mining.

T. K. we have a seen a period that during 2011, 2012, 2013 where the client mining was doing really good and after that, we've kind of seen a flat lining of the top 10 account growth et cetera.

Can you give us some more color on what's happening and whether the expansion of the mining is really working or is there something to be bothered about over here?

So, clearly there are two parts to the [EMS], it's a very good question and I'll answer that in two parts.

One is, if you look at our mining itself and if you look at the top accounts and if you eliminate the stresses that we've had from large big box retailers and some large oil makers, if you eliminate both these, our growth in the rest of the segment has been fairly decent.

In fact it's been a little above Company average.

So that's the positive.

The biggest work that we have to do today in terms of mining is to make sure that we are able to broad base our calling outside of the CIO's office and I think that's where the big focus is right now.

I'm feeling confident in the next couple of quarters you'll see the strength kind of reversing and that'll be -- that in our view should be positive for the Company and growth in the future.

Edward Caso, Wells Fargo.

On the infrastructure business, what's the opportunity set, sort of what's the level of renewals that are coming up here in the next two years and what are you saying about the incumbents protecting, are they willing to adjust their pricing or the way they're doing their business to be competitive, or is this just easy opportunity for Wipro and some of the other India-based peers?

This is G. K. Prasanna again.

The opportunity is big, it's been published and then depending on what you take it as, it's several hundred billions of dollars of renewals that are coming up in the next two years time.

And at the moment, there is a fairly significant advantage that Wipro and some of our peer group companies have right in this space and it is way beyond just pricing.

If I believe that this strength is [illusioning], the experience that we have in this space, the -- and other references that we have in this space, I think all of them are playing out to our advantage and I expect that to continue, in terms of we taking disproportionate market share of the renewals that are coming up in the next two years time.

My other question is on utilization, which has been, on a year-over-year basis is much higher for yourself and some of your peers.

I guess how much more is there to go and is there something in the industry that's driving this desire for higher utilization?

I would've thought it would have gone down as you're in the process of re-skilling your workforce?

HI, this is Saurabh here.

So if you look at the utilization for the current quarter, it is getting impacted because of the leave and this is a season with a quarter where there is high leave.

Net of lead, operationally, I think we are flat from last quarter and very clearly, we've seen the trend where we have been improving the utilization over the last few quarters and you would see that same trend as we move forward.

As far as head space is concerned, very clearly we see a head space to grow further on this one.

Srivathsan Ramachandran, Spark Capital.

I just wanted your comments on the energy verticals more from a cost take-out perspective.

Do understand that discretionary environment will be big, but do we see the strong steep decline in oil prices kind of make some of the customers who have been reluctant on the cost take-out side, kind of, make the decision cycle faster or expand the real estate that they might look at from a cost takeout point of view?

Absolutely.

But also realize that in the short term that will come at much lower prices than what we had in the past.

So I think you're already seeing price competition in that sector, especially for commoditized services, because everybody is going to fight to protect share.

It's not going to be unique to Wipro, all of us who claim that segment, especially the big -- the large guys who are dominant in that space and also compete to keep their real estate.

So in the short-term you're going to see price pressure coming.

The bigger opportunity is that today if you look at the way we address the market, there is a significant portion of the market that today is not addressed by [governments and Wipro].

And I think that's the big opportunity.

So for us, given our dominance in oil and gas and given the domain expertise that we've built over the years, we think we're in a unique position to grab this opportunity.

And on the -- just on -- if I had to look at for the next 12 to 18 months period historically 1Q of financial years have been slightly tepid.

Just wanted to understand how -- whether the existing pipeline buildup, or rather take-outs, gives confidence in kind of having a pretty good revenue growth on a sequential basis, on a three, four quarter period?

Srivathsan, all of us at [Wipro] are painfully aware of the fact that if we don't perform in quarter one you're dead for the year, I think that's clearly one of the issues for us.

So that's something that we are all focused around and that's something that we're working on.

I cannot give you a quarter one guidance right now.

But that is broadly what all of us are focused on driving.

Ravi Menon, Elara Capital.

And in your BPO, (inaudible) you've shown very good growth this quarter.

If you could give us some color around the deal or deals that ramped up in BPO and what's helping drive growth there?

So, one of the big things that we've been doing in BPO over the years is as the movement towards digital begins, we've been building our services around digital as a platform and especially offering BPO service around that.

We'll also been offering integrated services, combining both technology as well as process, so that we can drive the next level of digitization end-to-end as we go through the journey.

So, I think BPO last quarter had some nice wins in that particular space, where we're able to combine IT plus BPO together and that's the area of opportunity that's driven the last quarter.

Now, BPO, we will have a little bit of bumpiness in and out in quarters, at least for the next two quarters before they hit secular growth, but of this size.

But, overall, I'm very bullish about BPO.

And by the way, most of the growth that has come in incremental apart from the new deals have come in through (inaudible).

And if I could ask you about the IT products revenue that's declined, what really drives the segment of the business?

On the IT products, I'll ask Soumitro Ghosh who runs our India and Middle East business to kind of respond to it, because a significant portion of the market that sits for IT production really sits within his territory.

But just to give you a little bit of color on that, we typically sell IT products only when we have system integration opportunities as part of large contracts, but Soumitro can give you a little bit of color of what's happening in the India market, what's specifically is driving that particular trend.

I think T.K. just answered the question.

Fundamentally, we have a different philosophy that standalone hardware products business we are not chasing the way we used to chase earlier.

So clearly the focus is towards integrated deals and focus is towards services.

So to that extent, our entire proposition is where we have an end to end solution offered to the customer.

[As a ASI], he expects products to be sold along with the services.

So we are providing turnkey solutions to these customers.

Typically, government is a classic example, PSU banks are a classic example.

But standalone product deals, we are consciously not giving it the same priority as what we used to.

Just if I may sneak in one more follow-up to that, the India and Middle East business has seen a very strong growth this quarter again.

But despite that we've had this sort of year-on-year decline in the product business.

So, is the nature of your engagement changing?

No, the numbers for the India and Middle East business is the pure services business, the numbers which you are talking about for products is only products.

So on the services business, we've shown a sequential growth of 5.7% on reported basis.

So that's pure services.

Viju George, JPMorgan.

This is a good quarter.

Just one question on IT budgets.

I don't know T.K., if you have answered this in your prepared opening comments, but if you could just sort of ex-energy talk about how the budgets are looking like for you, based on your conversations with customers and how they look relative to last year?

Do you see a marked improvement in this year?

As far as budgets are concerned, Viju, outside of energy, fairly, I would say it's positive on the cost reduction piece of the business.

Clearly, very positive when it comes to discretionary expenses in the US.

Europe, we see signs of the market kind of changing a little bit and more outsourcing deals coming into the market clearly and these are mostly coming in from first-hand customers.

So overall, if you ask me, sitting where I am this year, compared to where I was sitting last year, customers' propensity to buy is clearly higher.

Thank you.

That's it from my side.

And I'd like to also take this opportunity to congratulate Jatin and to wish Mr. Senapaty all the very best.

Thank you Viju.

Thank you.

Sandeep Shah, CIMB.

First, thanks for a good quarter, congrats on a good quarter.

The first question is in terms of the oil and gas.

So, the fourth quarter guidance, is it the -- it's more about the directed or negotiated ramp-downs with the client, which has been factored or is it a combination of that plus our conservatism and towards the potential ramp-downs which can come?

So, hi, Sandeep, this is Jatin.

We have factored in the uncertainty that we see in oil and gas in our guidance.

Beyond that it won't be right to say, because guidance is always a view of what we see today of the quarter, which is forthcoming.

And we have factored in the uncertainty of oil and gas in our guidance.

Is there any negotiated ramp-downs, which is already -- like we have to do as per the direction of the client or it's more to do with our expectation of the likely ramp-downs which can come?

So, Sandeep, certainly we see that there is a reaction to the lower oil price from the client environment.

We -- and therefore, there's certainly pressure on the business and that has been factored in.

Now, it is difficult to say whether a project came to a closure and therefore, it was closed or a Phase II of the project, which could have been extended was not extended by the customer.

We have factored in that uncertainty in our guidance.

Okay.

Second question is in terms of some of the client-specific issues, which we were speaking about in the last couple of quarters, which was not just limited to ENU, it was being spread to other verticals, including BFSI.

So can you give a color how the segment-wise these issues are largely behind or this will impact the growth going forward also?

So, as you recall, Sandeep, we had said at that point that we think that this will persist for couple of quarters and that situation -- there is no further update to that situation.

Certainly, we didn't say it was the only quarter specific phenomena for quarter two, so we had said a couple of quarters and we are in that situation right now.

However, we do think that some of the work that got over and has not been replenished will start coming back as we enter 2015 and we are quite hopeful about it.

And last question is in terms of the deal pipeline.

Can you give some color in terms of the pipeline as well as the order book in this quarter versus YOY and QonQ, how does it look like?

And if you can share some TCV of the large deals?

So, Sandeep, you're aware that we don't share the detail that you have sought.

I can share with you qualitatively that we continue to see good demand in the marketplace.

We continue to see that we are participating there in the demand and we are winning also our fair share and sometimes a little better than our fair share.

And that is heartening.

And we hope that continues as we get into next few quarters.

Ashwin Mehta, Nomura Securities.

I had one question in terms of margins.

There was a material reduction in SG&A in this quarter and that was largely led by sales and marketing expenses.

So what led to that and given the fact that you're at almost three-year lows in terms of SG&A as a percentage of sales, how should we think of that going forward, especially in light of investments to drive sales, especially in the newer areas like digital?

So, Ashwin, we have not reduced any investment, our physical investment into any of our sales infrastructure, be in number of people or offices or our strength of reaching out to customer.

What you are seeing in terms of reduction is one quarter phenomena, it is also impacted by the fact that some of the spends are in European currencies and they have been disproportionately impacted in the current quarter, because of the depreciation of cross currency and there always be some lumpiness one quarter, which would be positive, one quarter would be negative, but we remain very invested in our sales efforts.

Omkar Hadkar, Edelweiss.

It's Sandip here from Edelweiss.

Congrats on good quarter and Happy New Year to this whole management team.

Thank you very much.

I would also take this opportunity to congratulate Jatin on new role and wish Mr. Senapaty all the best, we'll definitely miss you sir on earnings calls.

So my question is primarily related -- I'm not asking guidance so that is a disclaimer I would like to give, but TK if you say that other than energy and probably to some extent, telecom, we are seeing good opportunity and robust pipeline, so will it -- excluding energy and excluding telecom we will be at NASSCOM guidance range for next year, and also this two verticals will at least not de-grow; will it be a fair assumption?

So my reaction to that is, first of all, I don't know what NASSCOM guidance would be next year.

And second, certainly for our own growth projection, it is a little too early to comment on.

We will certainly come back to you in next quarter and talk about where we see the growth trajectory.

But I would like to highlight the fact that this is a quarter that we have seen the broad-based growth, you have seen healthcare, which has grown 7.5% sequentially in constant currency.

You have seen retail, which has.

(technical difficulty)

Hi, good evening, [Nitesh].

Thank you for the congratulations.

So in healthcare and life sciences, we continue to see the strong momentum really as an execution of the Wipro strategy and it's three-pronged.

The first is our investments in differentiated domain solutions have really helped, a case in point being driving medication adherence and analytics platform for a life sciences company that helps drive engagement and increase clinical trials.

Second, we continue to see our investments and leverage of strategic investments that we've made in Opera by creating powerful and relevant client offerings as an example of just differentiated domain offerings that helps in the growth.

The second has really been our ability to bring the best of Wipro to our core clients across infrastructure, across product engineering, application development and maintenance, case in point being [Tacada, Catholic Help] and some of the other life sciences customers.

The third to our strategy has been really our ability to add marquee new logos to our portfolio.

We added six new marquee new logos in this current quarter.

I see ourselves being able to execute to the strategy continuing in the next quarter and forward as most of our clients' requirements are being addressed through these three strategies that we've outlined here we at Wipro.

So, I'm very positive about us being able to address what our clients need today.

Thanks, Sangita.

This is [Rajshri Pandey] here.

Just to reflect on the retail, retail as an industry is going through a transformation as we speak.

And as you've looked at the holiday sales, they were really mixed.

While there's a drop in the store traffic, the retailers are seeing growth in online as well as mobile, which in one way it's a good news for a retailer.

So, what we see is as a trend in terms of the retailers investing for their revenue growth or business growth is on omni-channel retailing, which is becoming very significant.

There is lot of work that's happening around personalization, and also engaging the customers digitally.

And this is also driving efficiencies around multi-channel supply chain.

And we're participating in some of these.

Also T. K. alluded to BPO.

We're seeing a lot of work around customer experience and back office work in obviously the retail, that's driving some of the deals that we have.

Now, if you were to look at retailers, they're definitely stressed on pricing and margins and the cost takeout is another aspect of retailers that we see consistently across.

And T. K. alluded to that, which is reflecting in terms of application, infrastructure and BPO.

So, overall, while it's very mixed in terms of revenue, I think we've had some success in few of the customers, which has helped us grow.

The second aspect I definitely want to talk about is consumer goods, where we had a good deal pipeline and wins as well.

Again (inaudible) companies globally are in a cost pressure and a margin pressure and they're definitely investing in consumer engagement and digital channels.

Again, T. K. talked about that (inaudible) had a good quarter and that continues to have opportunities around.

Do we expect retail to now coming back to growth path?

So, if you look at retail in general, irrespective of whether you look at Europe or in the US, retailers -- if you look at the performance.

It has been choppy.

So at this point in time, the best I could say is that there is a drive by the retailers to take cost out, in addition to what I talked about application, infrastructure and [process].

They are also looking at taking cost out at the store level, be it in terms of energy management or taking cost around that labor and workforce optimization and also managing the store infrastructure much more optimally.

So those are areas we're getting traction around and I think we'll get to better understand now where the budgets are as we get into this quarter.

Right now, most of the customers are working on that.

And last question is about just to understand your increasing depreciation, whether there is any one-off or it is only because of amortization increase and this would be the new normal?

So, [Jitesh], I think this is on account of certain capitalization which we've done during the quarter and I think this will follow this pattern.

Ankit Pande, Quant Capital.

My question is around -- see, digital deals, I think you mentioned 10 digital deals.

Would this be a comparable number to (inaudible)?

No.

So the digital deals that we talked about really in most cases what we've started this quarter is really sitting and reimagining and re-drawing processing along with digital as the back lane.

I think that's what we're working on.

It's not significant enough to add to our revenue as I talked about earlier.

So to that extent, all I would encourage you to do is look at them as lead indicators in terms of opportunities that will come down in the future as we build more and more of the -- working with customers, build (inaudible) really you can start getting scale in digital.

And also on India and ME, we are seeing very good growth there, but is that rather macro led, do you think something to do with the change of government, change of business environment, or is that more specific to the situations that faces the Company?

So in oil and -- so really if you look at the Middle East, the Middle East market is primarily driven by commodities, especially oil and gas.

We're clearly seeing more opportunities coming out of the oil and gas segment in terms of outsourcing.

As far as the India market is concerned, I will ask Soumitro Ghosh to kind of react to that.

I'll just give a summary of the Wipro Infotech results.

I think, if I look at it from the geography perspective, we grew very strongly in both, India as well as Middle East and the India part being more heartening.

From a vertical perspective, four verticals really contributed to this growth.

One is (inaudible) and second is telecom, third is energy and utilities and the fourth is government.

From a service line perspective, while we have been always very strong on infrastructure, but this particular quarter, we saw very strong growth on the application side.

Coming specific to the question which you asked, Middle East was primarily contributed by energy and utilities, which is specifically more oil and gas and India was around, again, energy and utilities, more on the energy side than utilities and BFSI and telecom.

What is good is that we are seeing some large deals in the India market, as well as Middle East market.

So we saw four deals of pretty large size, two of them being outsourcing in nature, taking cost out, while two of them are really in the implementation and development stage.

Two very marquee wins which we won in the last quarter was IDFC, which was a new marquee win in the new banking license.

So we are really helping them drawing out the business architecture for the new banking license.

The other one is Andhra Pradesh architecture for the Digital World.

So broadly, a pretty strong growth.

Could you just give me a rough split between India and ME in the bucket there, is it mostly equal?

So, Middle East would be 40% and India would be 60%.

I just had a question around the payments paid as well, you've announced two deals here in the latest release.

TK, could you just highlight what kind of opportunity is there in the space?

I realize this is sort of a new trend, another new area where the banking players are looking to new development and new technologies, it's sort of an exciting space, so do you think that players who are more entrenched having their own traditional products in the banking space have sort of more leverage in the space already, or do you think that we can start from scratch and have as good a footing as anyone else here?

So I think fundamentally what's happening in this space, Ankit, that if you look at the entire payment space, as new technologies come in, payment the way we have known it for the past 30 years, 40 years is going to fundamentally go through a massive disruption.

And I just believe that with the technologies out there, that are available today, there are a lot more things that are going to happen in this space that we've ever been kind of -- ever seen or even imagined.

So, clearly from our perspective, that's a big push, that's clearly a differentiator for us, because we've done quite a few projects, especially with folks on the card side of the business and also with the equipment side of the business.

And a lot of the work that we're doing is we're actually using Open Source to leverage the technology depth that we carry.

That's really the exciting part of what we're trying to do here.

So, do you think that the entrenched banking product players, they don't really have an advantage in this space, is that the case?

No, it's like this.

I think they always have an advantage in the core, nobody is going move off the core very quickly.

But what we're going to see is on the edge there's going to be substantial changes, ultimately this core will get disrupted.

Ashish Aggarwal, Antique Stock Broking.

First of all I'd like to congratulate Jatin for his promotion and also thank you Mr. Senapaty.

My question -- most of my questions have been answered, just one thing.

In this quarter, were you surprised positively by any vertical, where you saw a strong growth helping you achieve towards the upper end of the guidance?

So whenever we give guidance, we give a range, we expect some negatives, we expect some positives.

I guess this time around the negatives did not happen, the positives did happen.

So, ex them, it's a normal quarter.

And secondly, this is more from the industry perspective, looking at the demand environment in this sector, do you think as an industry, IT or IT industry should do better than what they ought to do in FY15?

I really can't answer that question.

I can talk broadly about Wipro next quarter, but I can't talk about industry separately.

If you wait for a couple of weeks, you will have the NASSCOM estimates.

And I think we should wait for that to figure out where the industry would finally go.

Thank you.

Ladies and gentlemen, that was our last question.

I now hand the floor back to Mr. Aravind Viswanathan for closing comments.

Yeah.

Thanks.

Thank you all for joining the call.

In case we could not take any of your questions due to time constraints, please feel free to reach out to us.

Thank you and have a good day.

Thank you.

On behalf of Wipro Limited, that concludes this conference.

Thank you for joining us.

And you may now disconnect your lines.